Brussels: British Prime Minister David Cameron demanded safeguards on Thursday to prevent more power going to new European Union financial watchdogs as a condition for backing any change to the EU's basic law, according to a document seen by Reuters.
Germany is leading a drive to change the European Union's Lisbon Treaty to enshrine a new system of budget controls aimed at tackling the Eurozone debt crisis. But it needs the backing of Britain's reluctant government if it wants to involve all 27 EU countries in any change to the bloc's law.
At a meeting of EU leaders to decide how to tackle the debt crisis and pursue that amendment of the EU's fundamental law, Britain presented a list of concessions it would like in return for supporting such a move.
Cameron wants additional safeguards that would stop the EU's three financial watchdogs in charge of banking, insurance and markets from overruling country authorities.
"National supervisors should remain responsible for the day-to-day supervision of individual firms," the document said in a reference to Britain's desire to maintain its authority over the City of London financial district.
He believes this is needed to stop an EU watchdog such as the European Banking Authority ordering the recapitalisation of a British bank. "This would stop Europe being able to impose additional costs on the British taxpayer," said one diplomat familiar with the British position.
The demands fall short of a full "opt-out" on new financial regulation that some officials had expected Cameron would seek.
Britain also wants to secure the permanent location of the European Banking Authority (EBA) in London, Europe's top centre for financial services.
Cameron is furthermore seeking a pledge from the EU to address the current rule of the European Central Bank that euro-denominated transactions be cleared within the Eurozone. Britain wants it to be possible to clear such deals in London.
Finally, Britain wants to allow member countries the flexibility to beef up EU rules if they wish.
Relations between London and Brussels have grown strained as the European Union drafts new laws to tighten rules for banking and finance in the wake of the global financial crisis. London, Europe's financial capital, has the most to lose.
UK advises Scotland against going it alone
Scotland risks falling into a euro-style debt crisis if it cuts its budget ties with the United Kingdom as it could not withstand a severe financial shock alone, British Treasury minister Danny Alexander was expected to say yesterday.
Alexander was expected to argue in a speech, to be delivered as EU leaders meet to hammer out a deal to save the Eurozone, that the crisis shows Britain needs strong central control of budget policy and borrowing.
"Scotland within the monetary union, but fiscally independent, creates similar risks to those we see in the Eurozone," he was expected say, according to extracts of his speech seen by Reuters.
"If that crisis tells us anything, it is that strong control of fiscal policy and borrowing would have to be exercised centrally," he was expected to say in the Scottish capital of Edinburgh. Germany and France want to revive confidence in the Eurozone by changing the EU treaty to allow much tighter central oversight of member countries' budgets and borrowing.
The Scottish National Party (SNP), which won a majority in Scotland's devolved parliament in May, has promised to hold a referendum on independence within five years. But Alexander, a Scottish member of the British Conservative-Liberal Democrat coalition government, was to argue that the Eurozone's problems strengthen the case for Scotland to remain in its 300-year union with England.
